Thursday, October 23, 2008

Economic Decline

Taking few minutes to air my personal views on a few things.

Our economic decline affected a lot of people and businesses.  Home values, real-estate, and the stock market plummeting, bills and other commodities rising, and layoffs causing the increase in unemployment rate have a lot of people concerned and feel insecure about their future and that includes me, Anna the worker.  :)  The financial downturn started all the way at the top of banks, mortgage companies and brokerage firms which basically boils down to “greed at the top” as in serious greed.  This GREED is widely spread especially among some people with power, wealth, and utmost authority.

For instance……

When you’re a publicly traded company, you have stocks and there are individual companies that want to make money.  Company officials want to make as much money as they can because the more money they make, the more their compensation is and the more their stock price goes up.  There’s associated bonuses for the big wigs when they meet their numbers.  However, such reward shouldn’t just be based on numbers alone but the overall results of their performance including how well they’re doing with employee development.  Yes, “Employee Development” — there’s truly such a thing.  Managers have this type of responsibility to each of their employees.

In my opinion, if I own a company, I’ll make sure that I put the people first.  I believe in taking care of the people and investing in the people as they’re the engines that run the company.  I will capitalize in the best asset of my company, my entire workforce.  They will help the company generate the revenues it needs and grow the business which means money, as the second priority and then everything else can follow — as in things and other things.

If our leaders put people first before the greed for money, it would’ve meant caring enough for our human capital and prevent the situation we’re in today.  Responsible leadership means avoiding situations that create debts that we can’t afford or put us in situations where we overcommit and end up having to under deliver.  This is certainly not a good position to be in for anyone including the company or even the country.  I also believe that the lack of regulations and processes contributed to our downfall.  Some of these weren’t made “important” or were chosen to be “ignored” or simply weren’t established because they would cut into the bottom line or someone’s bonus, incentive or some type of personal gain.  I refuse to believe that “business essentials” were simply missed or overlooked especially when people in control are getting paid the amount of money they’re making.  In my opinion, regardless of how much salary you managed to negotiate with a company or even the government, if you do not deliver, you’re extremely overpaid.  The decent thing to do in this case is to step down or at least give some of that money back.  Equally important is sense of accountability and making people accountable.  You can’t expect a different result unless you make people accountable.  Agree?  [Oh man!  Am I on a roll or what?]  ;)

Back to Wall Street — The way I understand it is, the more money the brokerage firms, the mortgage companies and all those companies made, the better the economy was.  Because if they lent you money, you had money now that you could spend.  When the economy looks great, everyone feels like, “Oh, we’re doing great!”  The stock market goes up.  When the stock market goes up, the price of shares go up.  The compensation for the CEOs go up.  As things progressed, many of us fell under Wall Street’s spell.

On Main Street — There’s a lot of people who built their personal financial foundation on deceit and lies.  They bought home or homes, cars, and other things that they can’t afford.  They spent money like it was going out of style and it wasn’t their money to spend, because why?  They were “borrowing” it.  When you borrow money, you leverage yourself.

The United States of America leveraged itself so high that when it started to come down, the whole thing now has fallen down.  With all that being said, do you see where I’m coming from as in how this applies not only in the country as a whole but even in our lives?  at home?   even at work?

We are multi-trillion dollars (close to $50T, I believe) in debt which averages to about $450K per household.  Being in this deep of a hole is certainly not the American dream.  However, there’s hope should we choose to make it a way of making our dreams a reality.  There’s this saying, “When things are bad, we take comfort in the thought that they could always be worse.  And when they are, we find hope in the thought that things are so bad they have to get better.”

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